Question

I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was _______.

Answer 1

Answer:

The average fixed cost to produce 7,000 can openers was $17,000

Explanation:

The fixed cost are those who don't change based on the production levels, while the variable costs depends on the production.

If we add variables cost with fixed cot we will get the total cost.

Variable cost + Fixed Cost = Total cost

Then for knowing the fixed cost we should substract to the total cost the variable cost

Fixed Cost = Total Cost - Variable Cost     Now replace the values

Fixed Cost = $45,000 - 28,000

Fixed Cost = $ 17,000

The average fixed cost to produce 7,000 can openers was $17,000